Can You Work for a Competitor if You Signed a Non-Compete?
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If you are thinking about leaving your job and accepting a new position with a competitor, if you have been served with a "cease and desist" letter threatening enforcement of your non compete, or if you have actually been sued by your former employer, you may be wondering exactly how enforceable this agreement is.
The good news is that there are many reasons a court may not enforce your non compete, or may narrow the extent to which it can be enforced. Here are some of the most common ways that employees have been able to get around a non-compete. Your Agreement Could be Void Under the Massachusetts Non Compete LawIf you signed your agreement on or after October 1, 2018, there are some specific rules your employer has to follow in order to enforce the agreement. These include giving you time to review and advising you to seek legal advice before you sign a non compete, and agreeing to pay you of half your salary during the non compete period. See answers to some frequently asked questions about the new non compete law.
Under the new law, If you signed your agreement on or after October 1, 2018, if you are laid off or terminated without cause, your employer cannot enforce the agreement against you. Also, if your position was not exempt from overtime laws, the agreement cannot be enforced against you. The old law made no such distinction, but if you had a lower position in the company it is still worth exploring whether there really is any legitimate interest for the employer to protect. If your agreement is subject to the new law, you also have the right to be paid at 50 percent of your base for the restricted period. This is called garden leave, and it is an important new right for employees. |
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Your Non Compete Could be Unenforceable if it Does Not Protect Trade Secrets or Goodwill
A non compete has to protect the employer's "legitimate" business interest. This generally means either it is necessary to protect trade secrets/confidential information or to protect the employer's goodwill with its customers and prospective customers. Simply wanting to prevent you from working for a competitor using your skills and experience is not generally a legitimate business interest of the employer.
If you do not have access to confidential information in your job, or if you have no customer-facing responsibilities in your job, you may have a defense to enforcement of the agreement.
If you do not have access to confidential information in your job, or if you have no customer-facing responsibilities in your job, you may have a defense to enforcement of the agreement.
Your Non-Compete Could be Unenforceable if it is Overbroad
The restrictive covenant has to be reasonable in time and geographic area. Under the new law, anything over one year will be considered unreasonable. Even if your agreement is older than that, courts will look to see if it restricts you for more time than is reasonably necessary to protect the employer's legitimate interests (see above).
If you believe that either the period of time for your non compete or the geographic area it covers is broader than it needs to be you may have a defense to enforcement of the non compete.
Keep in mind, however, that Massachusetts law allows the court to engage in "blue penciling" the agreement. That means that if the court thinks the non compete provisions are too broad, it can narrow those terms and still enforce the agreement.
If you believe that either the period of time for your non compete or the geographic area it covers is broader than it needs to be you may have a defense to enforcement of the non compete.
Keep in mind, however, that Massachusetts law allows the court to engage in "blue penciling" the agreement. That means that if the court thinks the non compete provisions are too broad, it can narrow those terms and still enforce the agreement.
Your Non Compete Could be Void if You Did Not Receive Consideration
"Consideration" is the legal term for the benefit you receive in exchange for signing any contract, including an employment contract. The new law explicitly states that you must receive a fair and reasonable benefit for your agreement not to compete.
Even under the old law, courts will look to see if you received something of value. If you are signing an agreement as a condition of accepting a new job, the employer does not have to pay you anything additional for your signature. If you are asked to sign an agreement after you have started work, however, the employer must give you something in exchange. That value could be a bonus, a raise, perhaps a promotion, but should be something in addition to just continued employment.
Even under the old law, courts will look to see if you received something of value. If you are signing an agreement as a condition of accepting a new job, the employer does not have to pay you anything additional for your signature. If you are asked to sign an agreement after you have started work, however, the employer must give you something in exchange. That value could be a bonus, a raise, perhaps a promotion, but should be something in addition to just continued employment.
Your Non Compete Could be Void if Your Job Changed After You Signed It
Enforcement of non compete agreements can be affected by things that happen after you start the employment relationship. For example, we have handled cases where a material change in job responsibilities, compensation or other conditions of employment were found to nullify an existing non compete agreement.
Whether this defense will help you depends in part on how substantial the change was, and whether it also changed the nature of what the employer is seeking to protect. The more years of employment you had with your employer, the higher the likelihood that a material change has occurred since you signed the agreement.
Whether this defense will help you depends in part on how substantial the change was, and whether it also changed the nature of what the employer is seeking to protect. The more years of employment you had with your employer, the higher the likelihood that a material change has occurred since you signed the agreement.
Your Non Compete Could be Unenforceable if Your Employer Did Not Pay You Wages, Salary or Commissions as Agreed
With any contract, if one party to the contract breaches the agreement in a material way, the other party may be excused from doing what he or she agreed to do in return.
For a non compete, an employer's breach of a material term of the employment agreement (such as nonpayment of wages or commissions) may excuse you from honoring the non compete agreement.
This comes up most often in the context of commissioned salespeople. Non competes are common in sales jobs because of the employee's regular contact and relationships with customers and the employer's interest in protecting that good will. It is also common for commission-based sales people to have questions or disputes about the proper payment of their commissions.
If your employer does not pay you all commissions owed, you may have a valid defense to enforcement of your non compete. The same is true for any employee- if your employer does not pay you the wages or salary or other benefits you agreed to, this could be a defense to enforcement of the non compete.
For a non compete, an employer's breach of a material term of the employment agreement (such as nonpayment of wages or commissions) may excuse you from honoring the non compete agreement.
This comes up most often in the context of commissioned salespeople. Non competes are common in sales jobs because of the employee's regular contact and relationships with customers and the employer's interest in protecting that good will. It is also common for commission-based sales people to have questions or disputes about the proper payment of their commissions.
If your employer does not pay you all commissions owed, you may have a valid defense to enforcement of your non compete. The same is true for any employee- if your employer does not pay you the wages or salary or other benefits you agreed to, this could be a defense to enforcement of the non compete.
Non Compete Agreements and Independent Contractors
If you are paid as an independent contractor, you may have additional bases to challenge the non compete.
How We Can Help
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We can help you get clarity on your rights and obligations under your non compete clause, so you can make an informed decision about whatever you are facing. You can use the button below to schedule a call back from a member of our team, OR give us a call at 781-784-2322.
